OPERATIONS MANAGEMENT: Creating Value Along the Supply Chain, Canadian Edition Robert S. Russell, Bernard W. Taylor III, Ignacio Castillo, Navneet Vidyarthi CHAPTER 8 Human Resources

Learning Objectives Discuss the basic principles of human resources management that quality-focused companies follow. Explain the history and principles of scientific management and subsequent employee motivation theories. Discuss contemporary trends in human resources management. Explain different methods of employee compensation. Discuss current issues relating to employee diversity, including examples of diversity initiatives. Describe factors that must be considered in good job design. Use a process flowchart, a worker–machine chart, and motion study to examine how work is done. Use learning curves for measuring work improvement, planning, and scheduling.

Lecture Outline Human Resources and Quality Management Changing Nature of Human Resources Management Contemporary Trends in Human Resources Management Employee Compensation Managing Diversity in Workplace Job Design Job Analysis Learning Curves

Human Resources and Quality Management Employees play important role in quality management Most successful companies, including Canada Awards for Excellence (CAE) winners, have a pervasive human resource focus Employee training and education are recognized as necessary long-term investments Employees have power to make decisions that will improve quality and customer service Strategic goals for quality and customer satisfaction require teamwork and group participation

Changing Nature of Human Resources Management Scientific management Breaking down jobs into elemental activities and simplifying job design Jobs Comprise a set of tasks, elements, and job motions (basic physical movements) In a piece-rate wage system, pay is based on output Assembly-line Production meshed with principles of scientific management Advantages of task specialization High output, low costs, and minimal training Disadvantages of task specialization Boredom, lack of motivation, and physical and mental fatigue

Employee Motivation Motivation Improving Motivation willingness to work hard because that effort satisfies an employee need Improving Motivation positive reinforcement and feedback effective organization and discipline fair treatment of people satisfaction of employee needs setting of work-related goals Improving Motivation (cont.) design of jobs to fit employee work responsibility empowerment restructuring of jobs when necessary rewards based on company as well as individual performance achievement of company goals

Evolution of Theories of Employee Motivation Self- actualization Esteem Social Safety/Security Physiological (financial) Abraham Maslow’s Pyramid of Human Needs Douglas McGregor’s Theory X and Theory Y Theory X Employee Dislikes work Must be coerced Shirks responsibility Little ambition Security top motivator Theory Y Employee Work is natural Self-directed Controlled Accepts responsibility Makes good decisions Frederick Herzberg’s Hygiene/Motivation Theories Hygiene Factors Company policies Supervision Working conditions Interpersonal relations Salary, status, security Motivation Factors Achievement Recognition Job interest Responsibility Growth Advancement

Contemporary Trends in Human Resources Management Job training extensive and varied two of Deming’s 14 points refer to employee education and training Cross Training an employee learns more than one job Job rotation horizontal movement between two or more jobs according to a plan Empowerment giving employees authority to make decisions Teams group of employees work on problems in their immediate work area

Contemporary Trends in Human Resources Management Job enrichment vertical enlargement allows employees control over their work horizontal enlargement an employee is assigned a complete unit of work with defined start and end Flexible work schedules part of a daily work schedule in which employees can choose time of arrival and departure Alternative workplace nontraditional work location Telecommuting employees work electronically from a location they choose Temporary and part-time employees mostly in fast-food and restaurant chains, retail companies, package delivery services, and financial firms

Employee Compensation Types of pay hourly wage the longer someone works, the more s/he is paid individual incentive or piece rate employees are paid for the number of units they produce during the workday straight salary common form of payment for management commissions usually applied to sales and salespeople

Employee Compensation Gainsharing an incentive plan joins employees in a common effort to achieve company goals in which they share in the gains Profit sharing sets aside a portion of profits for employees at year’s end

Managing Diversity in Workplace Workforce has become more diverse A survey of Fortune 1000 companies showed that diversity initiatives and programs can have a beneficial effect on company profits and success The Conference Board of Canada estimates that the country needs 375,000 new immigrants annually to stabilize the workforce and ensure economic growth Companies must develop a strategic approach to managing diversity US slides: 4 out of every 10 people entering workforce during the decade from 1998 to 2008 will be members of minority groups In 2000 U.S. Census showed that some minorities, primarily Hispanic and Asian, are becoming majorities

Affirmative Action and Managing Diversity an outgrowth of laws and regulations government initiated and mandated contains goals and timetables designed to increase level of participation by women and minorities to attain parity levels in a company’s workforce not directly concerned with increasing company success or increasing profits Managing diversity process of creating a work environment in which all employees can contribute to their full potential in order to achieve a company’s goals voluntary in nature, not mandated seeks to improve internal communications and interpersonal relationships, resolve conflict, and increase product quality, productivity, and efficiency

Diversity Management Programs Education Awareness Communication Fairness Commitment

Global Diversity Issues Cultural, language, geography significant barriers to managing a globally diverse workforce E-mails, faxes, Internet, phones, air travel make managing a global workforce possible but not necessarily effective How to deal with diversity? identify critical cultural elements learn informal rules of communication use a third party who is better able to bridge cultural gap become culturally aware and learn foreign language teach employees cultural norm of organization

Attributes of Good Job Design Goals and achievement feedback A perceived contribution to a useful product or service Opportunities for personal relationships and friendships Some influence over the way work is carried out in groups Use of skills An appropriate degree of repetitiveness An appropriate degree of attention and mental absorption Some employee responsibility for decisions and discretion Employee control over their own job

Factors in Job Design Task analysis Worker analysis how tasks fit together to form a job Worker analysis determining worker capabilities and responsibilities for a job Environment analysis physical characteristics and location of a job Ergonomics fitting task to person in a work environment Technology and automation broadened scope of job design

Elements of Job Design

Job Analysis Method Analysis (work methods) Study methods used in the work included in the job to see how it should be done Use a variety of charts that illustrate in different ways how a job or work process is done

Process Flowchart Symbols Operation: An activity directly contributing to product or service Storage: Store of the product or service Inspection: Examining the product or service for completeness, irregularities, or quality Transportation: Moving the product or service from one location to another Delay: Process having to wait

Process Flowchart

Worker-Machine Chart – 1 – 2 – 3 – 4 – 5 – 6 – 7 – 8 – 9 Key in customer data on card Feed data card in Position customer for photo Take picture Inspect card & trim edges Idle Photo/card processed Accept card Begin photo process 2.6 0.4 1.0 0.6 3.4 1.2 Job Photo-Id Cards Date 10/14 Time Time (min) Operator (min) Photo Machine

Worker-Machine Chart: Summary Operator Time % Photo Machine Time % Work 5.8 63 4.8 52 Idle 3.4 37 4.4 48 Total 9.2 min 100% 9.2 Min 100%

Motion Study Used to ensure efficiency of motion in a job Frank & Lillian Gilbreth Find one “best way” to do task Use videotape to study motions

Motion Study Guidelines Efficient Use Of Human Body Work simplified, rhythmic and symmetric Hand/arm motions coordinated and simultaneous Employ full extent of physical capabilities Conserve energy use machines, minimize distances, use momentum Tasks simple, minimal eye contact and muscular effort, no unnecessary motions, delays or idleness

Motion Study Guidelines Efficient Arrangement of Workplace Tools, material, equipment - designated, easily accessible location Comfortable and healthy seating and work area Efficient Use of Equipment Equipment and mechanized tools enhance worker abilities Use foot-operated equipment to relieve hand/arm stress Construct and arrange equipment to fit worker use

Learning Curves Improvement rate of workers as a job is repeated Processing time per unit decreases by a constant percentage each time output doubles Units produced Processing time per unit

Learning Curves Time required for the nth unit = tn = t1nb where: tn = time required for nth unit produced t1 = time required for first unit produced n = cumulative number of units produced b = where r is the learning curve percentage (decimal coefficient)

Learning Curves Contract to produce 36 computers. t1 = 18 hours, learning rate = 80% What is time for 9th, 18th, 36th units? t9 = (18)(9)ln(0.8)/ln 2 = (18)(9)-0.322 = (18)/(9)0.322 = (18)(0.493) = 8.874hrs t18 = (18)(18)ln(0.8)/ln 2 = (18)(0.394) = 7.092hrs t36 = (18)(36)ln(0.8)/ln 2 = (18)(0.315) = 5.674hrs

Learning Curves With Excel

Learning Curves With OM Tools

Learning Curve for Mass Production Jobs Standard time End of improvement Units produced Processing time per unit

Learning Curves Limitations Advantages product modifications negate learning curve effect improvement can derive from sources besides learning industry-derived learning curve rates may be inappropriate Advantages planning labor planning budget determining scheduling requirements

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